Insurers currently spend a great deal of time and money on information management, but the information tends to reside in disconnected platforms, projects, databases and tools. In response, many companies are or are thinking about embarking on modernization initiatives. They realize that advanced analytics from IT improvements can help them enhance reporting, improve response times and provide stakeholders more actionable information.
When modernizing, there are several things to keep in mind:
- No organization has the financial resources to cleanse and array all the data and information it may ever want.
- Investment levels need to match the company’s vision. Combining disparate efforts into a cohesive information strategy can partially offset high costs.
- While finance and actuarial are the primary drivers of modernization because they need to report and book results, all business partners need to supply, receive, analyze and explain financial and related operating data.
- Modernization will create the foundation for an enterprisewide range of data and analytics. A uniform approach will provide a real competitive advantage.
Accordingly, companies will need to:
- Develop focused information strategies to support actuaries, financial executives and others in the organization who rely on financial and reporting information.
- Frame the future vision and fund a flexible roadmap for implementation. Ensure the roadmap prioritizes the most important things and that it can change to meet new demands and realities.
- Manage data and information, including data ownership and governance, and the ability to cleanse and provision the data so it can be presented in advanced tools and manipulated by end-users, while maintaining source-information integrity.
The Ideal End-State
In a modernized company, a synergy of efficient processes with clearly defined stakeholder expectations exists between and among the risk, finance, actuarial and IT functions.
- The organization defines data strategy and executes its responsibilities according to it. Rather than the traditional bottom-up data approach where the analysis capabilities flow from the collected data, data is strategically viewed top-down. The company identifies analytical needs and then adopts a data strategy that supports them. Data flows from commonly trusted sources of the truth and can be extracted for analytical purposes with minimal manual intervention.
- Tools and technology enhance finance and actuarial effectiveness by providing them information faster, more accurately, and more transparently than traditional ad hoc, end-user computing analyses. Tools that focus on data visualization can more effectively convey trends and results to management. Algorithms can be programmed to automate first cut reserving analyses each quarter based on a rules engine, which can help point staff to business segments that may require deeper analysis in the quarter.
- The organization emphasizes robust methods and analysis that yield better insights than traditional methods. Examples include predictive analytics, which have transformed personal lines pricing and stochastic analysis.
- Management’s receipt of superior business intelligence is often dependent on organizational structure and resources. PwC believes the organization of the future will align its capabilities as much as possible with the end-user, with IT serving as a backstop that can provide end-users what they need.
- A concerted, cohesive insurance modernization program will require a change in the portfolio-spend on information management. Spending will change from a spread across disparate efforts to a focus on strategically aligned ones.
The Benefits
The thought of potentially overhauling entire systems, processes and functional areas may seem overwhelming for executives as they set out to modernize their organizations. However, cutting-edge reporting is now table-stakes, not just a competitive advantage. Modernization’s immediate benefit is better reporting and actuarial analysis to support financial decisions, but an even more critical benefit is improved analytics and decision making throughout the rest of the organization.
Bruce Brodie is a managing director of IT Strategy with PwC; Mike Mariani is a principal of IT Strategy with PwC; and Josh Schwartz is a director of IT Strategy with PwC. Also, PwC senior manager Eric Trowbridge contributed to this post.
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